Blue Whale Capital, the fund management company backed by billionaire Peter Hargreaves, more than doubled profit during its last financial year on the back of an almost 90% increase in investment management fee revenue.
The company, which was founded by Hargreaves and fund manager Stephen Yiu in 2016, generated a £5.6m profit in the 12 months to the end of March 2022, up from £2.5m for the previous year.
Investment management fees rose to £8.8m from £4.6m during the period, according to company accounts seen exclusively by Financial News.
Hargreaves and Yiu, who before setting up Blue Whale worked together at Hargreaves Lansdown, have not yet taken any profit from the company since its inception.
Hargreaves’ family holds more than £150m in the Growth strategy, while Yiu does not invest in any other funds apart from the one he manages.
The bumper profit for Blue Whale coincided with an increase in assets for its flagship Growth fund last year, which is overseen by Yiu. The fund grew assets to a peak of more than £1bn last year, although this has since fallen to around £788m amid a tough market for stock pickers in 2022.
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With more than 46% of its assets allocated to the tech sector, the fund returned 20.8% in 2021 compared to 18% for the IA Global Average sector.
The rise in revenue and profit occurred before a market reset earlier this year, where technology companies in particular suffered huge share price falls.
FNrevealed in January that Yiu had dumped his entire stake in Amazon, having held the US online retail giant for four years.
His decision was prompted by concerns over rising competition affecting Amazon’s retail business and the longer-term outlook for its successful cloud-based platform, Amazon Web Services.
Yiu also sold his stakes in Meta and PayPal ahead of a brutal selloff that wiped billions from the value of the two tech companies in February.
The Growth fund still holds some well-known tech stocks among its top 10 holdings, including Microsoft, graphics chipmaker Nvidia, and cloud computing firm Veeva Systems.
However, it does not hold any of the famous FAANG stocks that delivered sizeable returns for investors during the onset of the Covid pandemic.
Performance for the fund this year has suffered amid a tough period for tech stocks, and has returned -25.8% compared to the IA Global Average’s -9.5%.
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In August Blue Whale announced it would invest £10,000 of the firm’s money each month into the Growth fund over the next 12 months as part of a “pound-cost averaging exercise”.
Yiu also recently allocated money to the energy sector, representing some 4.2% of the fund’s assets.
“We’re still building a position, but will announce it in the new year,” Yiu told FN.
“We’ve been focused on looking for new opportunities and the energy sector is not one we have considered before. There are selective opportunities there.”
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